Bullard Discusses Inflation, Policy Rate with CNBC
February 14, 2022
St. Louis Fed President Jim Bullard discussed the upside surprise on inflation and his views on raising the target range for the federal funds rate during an interview on CNBC’s Squawk Box.
He noted that the last four CPI inflation reports taken together “have indicated that inflation is broadening and possibly accelerating in the U.S. economy.”
He said that he would like to see the Federal Open Market Committee raise the policy rate by 100 basis points by July 1, adding that he would defer to Fed Chair Jerome Powell on exactly how to go about that. “But I do think we need to front-load more of our planned removal of accommodation than we would have previously,” Bullard said.
He noted that year-over-year headline CPI inflation in January was at a rate that hadn’t occurred in 40 years. “Our credibility is on the line here, and we do have to react to data. However, I think we can do it in a way that’s organized and not disruptive to markets,” he said.
He also discussed the increase in the 2-year Treasury yield since October, which he said means that there is some removal of accommodation already priced in the market. However, he added that the Fed has to follow through and ratify the expectations that have been built in.
“We have to reassure people that we’re going to defend our inflation target and we’re going to get inflation back to 2%,” he said.
During the interview, he also said that he wants Fed balance sheet runoff to get going in the second quarter and that he doesn’t see geopolitical uncertainty as a leading U.S. macroeconomic issue at least at this point.
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